Fed News Friday: New and Improved: Inflation-free Inflation, from the Federal Reserve!

March 9th, 2012

"Watch this you guys! I am now holding down inflation levels through mind control."

Have you ever seen those short infomercials about some pill that you can take before a night of heavy drinking and *using my smooth, deep, infomercial announcer voice* magically wake up refreshed and alert the next day! No more headaches! No more hangovers! Our proprietary, patent-pending formula has been proven in clinical trials to… blah blah blah, blahblah blah blah… yours today for only $19.99!

Yeah, I never believed those commercials and I never ordered their little pill. Actions have consequences. Drinking too much will stress the body in all kinds of nasty ways that lead to a hangover the next day. You’ll feel good while you’re doing it, but there’s just no such thing as a magic pill to avoid the effects of partying hard.

I also don’t believe the Federal Reserve’s new approach to quantitative easing that could boost the economy without causing inflation. I’m actually not even sure if I believe it’s a new approach to quantitative easing instead of just a new approach to selling its Keynesian policies to an increasingly skeptical American public…

The article at the link says: “Republicans in Congress have been urging the Fed not to undertake any more quantitative easing, arguing that it would lead to higher inflation eventually.” Who knows, the politicians in Congress may be dumb enough to swallow the Fed’s magic new way to do what has always defaced and devalued a civilization’s money supply without devaluing it this time. It’s like: “No, communism would definitely work if we tried it today. Those other times they didn’t do it right. You just gotta believe. We are the 99%!” And the crowd goes up-twinkle wild!

Anyway, I’m not buying it and I know you don’t either. Think getting wasted is bad for your brain? Radically expanding the money supply will stress the economy in all kinds of really nasty ways that lead to a misallocation of resources toward economically destructive uses, and the economy will suffer its own hangover the next day. The stimulus will feel good while you’re doing it (especially if you’re a fat cat banker with connections to people at the Fed), but there’s no such thing as a magic solution to avoid the simple, mathematical reality of what easing does to a monetary base.

As many economists are fond of saying: “There ain’t no such thing as a free lunch.” There isn’t. The more I read the news, the more articles have been starting to sound like I’m reading them on The Onion lately. Anyone else feel that way? Reading the Market Watch article about this, I can’t help but feel like it could be an Onion article: Fed discovers new way to fundamentally alter the nature of reality and the dictates of logic to inflate the currency without inflating the currency.

That inflation-free inflation headline above comes to you courtesy of Mike Nystrom, by the way. Wish I could take credit. I also wish I could take credit for this graphic. Because that’s all this new cold remedy without side effects is: snake oil.

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About the Author: Wes

Wesley Messamore, 24, is an independent journalist and political activist who believes in the Founding Father's vision of a free, enlightened, and moral America. He also blogs at HumbleLibertarian.com